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Revision of stakes gives more independence to RK Swamy BBDO

15-February-2010
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Revision of stakes gives more independence to RK Swamy BBDO

When BBDO had won the 7Up account for the Indian market, speculations were rife about the multinational agency setting up shop in India on its own. However, as is known, it was only in November 2007 that BBDO India was launched via a partnership arrangement between RK Swamy BBDO and BBDO Asia.

As per the partnership agreements, RK Swamy BBDO had a minority stake in BBDO India, while BBDO Asia had a ‘significant minority’ stake in RK Swamy BBDO.

In a recent development, the Board of Directors for BBDO India and RK Swamy BBDO came to a consensus that allows RK Swamy BBDO to exercise a ‘significant minority’ in BBDO India. Exact figures pertaining to the stakes could not be ascertained at the time of filing this report. However, according to sources in the know, it is understood that RK Swamy BBDO will now have about 35 per cent shareholding in BBDO India, which is about a 15 per cent increase in the shareholding.

Srinivasan K Swamy, Chairman, RK Swamy Hansa Group, and Shekar Swamy, Group CEO, RK Swamy Hansa Group have confirmed this development.

Furthermore, this means that the two companies – RK Swamy BBDO and BBDO India – henceforth, will operate as two different entities. Srinivasan K Swamy explained, “RK Swamy BBDO will be an Indian company with strong international connection, while BBDO India will be a multinational company. We will have a significant minority stake in BBDO India, while the parent BBDO has a significant minority stake in RK Swamy BBDO.”

He further elaborated, “We have worked with them (BBDO) since 1985 and we have been insisting on having multiple brands in India, primarily to increase our share in the market. This has now finally become a reality. We have done all the necessary paperwork. Cheques have been signed, and monies exchanged. Both the parties are happy. The two companies will now have two distinct flavours.”

When questioned on what price the company had paid, Srinivasan Swamy replied, “We have paid a fair price, and we are sure this move will take us a long way.”

Explaining the benefit of running an independent company, Srinivasan Swamy said, “We are a very strong Indian agency with a very strong international connection. There is a lot of merit in being a part of a large network. But at the same time, there is also a lot of merit in having the independence to run your own company. If you’re an arm of an international company, you’re restricted in many ways in how you conduct your business.”

Srinivasan Swamy; Shekar Swamy; Chris Thomas, CEO - Asia Pacific, BBDO; and Keoy Soo Siong, Chief Financial Officer, Asia & Japan, BBDO, are on the Board of both the companies.

(Please read impact’s latest issue for an indepth interview with Srinivasan Swamy and Shekar Swamy, where they discuss the revision in stakes at length.)

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